In our conversations with government about cash transfers, one of the concerns that arose was how they would affect the social fabric. Might cash transfers negatively affect how citizens interact with each other, or with their government? In our new paper, “Cash Transfers Increase Trust in Local Government” (can you guess the finding from the title?) – which we authored together with Brian Holtemeyer – we provide evidence from Tanzania that cash transfers increase the trust that citizens have in government. They may even help governments work a little bit better.

This is the seventeenth, and penultimate, of this year’s job market series.

Research question and motivation
That early-life events can affect adult outcomes is now well established. Lifelong health, education, and wages are all shaped by events of the in-utero and early-childhood environments (Barker 1992; Cunha and Heckman, 2007; Almond et al., 2017). To the extent that adverse shocks can often not be prevented, a key task for researchers and policymakers is to ascertain the potential for and degree of mitigation: Could investing in children's health and education help reduce gaps caused by early-life adversities?

In my job-market paper, we study whether the returns on human capital investments on children differ by exposure to adverse early-life shocks. We focus on two shocks that significantly affect households in developing countries: adverse weather shocks -- i.e., floods and droughts, which reduce children's initial skills--, and the introduction of conditional cash transfers (CCTs), which provide monetary subsidies to families with young children conditional on investments in children's health and education. In particular, we provide empirical evidence on how the effects of CCTs on children's long-term educational outcomes interact with children's early-life exposure to adverse weather shocks.

Cash transfers are great – lots of people are telling you that on a continuous basis. However, it is an open question as to whether such programs can improve the wellbeing of their beneficiaries well after the cessation of support. As cash transfer programs continue to grow as major vehicles for social protection, it is increasingly important to understand if these programs break the cycle of intergenerational poverty, or whether the benefits simply evaporate when the money runs out…

On September 30, the Guardian ran several articles (see here, here, and an editorial here) linking the halving of Peru’s stunting rate (from 28 to 14% between mid-2000s and 2015) to its CCT program Juntos. Of course, it is great to hear that the share of stunted children in Peru declined dramatically over a short period. However, as I know that while CCT programs (conditional or not) have been successful in improving various outcomes including child health, the effect sizes are never this dramatic, I was curious to see whether the decline was part of a secular trend in Peru or actually could be attributed primarily to Juntos…

Conditional cash transfers (CCTs) and other types of financial incentives have been used successfully to promote activities that are beneficial to the participants such as school attendance and health check-ups for children. CCTs pay a certain amount if the condition is verified.

Lotteries can also be used as an incentive. Instead of being paid a certain amount, the participants who satisfy the condition receive a lottery ticket, a random draw is performed among the tickets, and a predetermined number of winners earn a lottery prize. The value of the lottery prizes would be higher than the typical CCT amount, but the number of recipients of the prizes would be lower.

"Let me tell you what I think of bicycling. I think it has done more to emancipate women than anything else in the world. I rejoice every time I see a woman ride by on a wheel. It gives her a feeling of self-reliance and independence the moment she takes her seat; and away she goes – the picture of untrammeled womanhood." - Susan B Anthony

Many policymakers are interested in the role of conditions in cash transfer programs. Do they improve outcomes of interest more than money alone? Are there trade-offs? Is there a role for conditions for political rather than technocratic reasons? It’s easy to extend the list of questions for a good while. However, before one can get to these questions, there is a much more basic question that needs to be answered (for any policymaker contemplating running one of these programs at any level): “What do you mean by a conditional (or unconditional) cash transfer program?”